Calcutta High Court
Contract And Construction Society & Anr vs Debabrata Sarkar And Anr on 27 April, 2026
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION 2026:CHC-OS:139
ORIGINAL SIDE
RESERVED ON: 01.04.2026
DELIVERED ON: 27.04.2026
PRESENT:
HON'BLE JUSTICE GAURANG KANTH
AP-COM 835 OF 2025
BALURGHAT CO-OPERATIVE LABOUR
CONTRACT AND CONSTRUCTION SOCIETY & ANR.
VERSUS
DEBABRATA SARKAR AND ANR.
Mr. Soumya Ray, Adv.
Ms. Anwesha Saha, Adv.
Ms. Reshmi Mukherjee, Adv.
Mr. Ashok Halder, Adv.
..... for the petitioners
Mr. Srijan Nayak, Adv.
Ms. Rituparna Moitra, Adv.
Mr. Saurav Chaudhuri, Adv.
..... for the respondent No. 1
Mr. Prisanka Ganguly, Adv.
...for the respondent no.2
JUDGMENT
Gaurang Kanth, J.:-
1. The present Petition has been filed under Section 11 of the Arbitration and
Conciliation Act, 1996, seeking appointment of a Sole Arbitrator for
adjudication of disputes that have arisen between the parties out of a
Development Agreement dated 06.01.2022, registered on 14.01.2022,
executed between the Petitioners and Respondent No. 1.
2. The facts giving rise to the present Petition are set out hereunder:
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3. Petitioner No. 1 is a Co-operative Society registered under the West Bengal
Co-operative Societies Act, 1961, and Petitioner No. 2 is its Director. The
Petitioners are engaged in the business of civil construction and
infrastructure development. Respondent No. 1 is the owner of land
measuring 14.82 and 14.81 decimals, purchased from Balurghat Town
Commercial Company Ltd., being R.S. Plot No. 202, L.R. Khatian No. 2353,
L.R. No. 723, Mouza – Khadimpur, J.L. No. 110, P.S. Balurghat, Premises
No. 17/12, Ward No. 22, under Balurghat Municipality.
4. Petitioner No. 2, on behalf of Petitioner No. 1, entered into a Development
Agreement dated 06.01.2022 (registered on 14.01.2022) with Respondent
No. 1 for construction of two six-storied buildings comprising 55
residential units, 35 commercial units, and associated car parking spaces.
5. It is the case of the Petitioners that Respondent No. 2 subsequently
expressed willingness to invest in the said development project, pursuant
to which a supplementary agreement dated 09.11.2022 was executed
between Petitioner No. 2 (in his capacity as Director of Petitioner No. 1),
Respondent No. 1, and Respondent No. 2. However, the said tripartite
arrangement did not subsist, as Respondent No. 2 exited the project
without any formal communication.
6. Thereafter, a final arrangement was arrived at between the Petitioners and
Respondent No. 1, whereby it was agreed that the Petitioners would retain
the sale proceeds of all residential units, commercial units, and car
parking spaces, except for 9 units (flats/shops) allocated to Respondent
No. 1.
7. In furtherance of the said arrangement, Respondent No. 1 executed a
General Power of Attorney dated 24.02.2025 (registered on 25.02.2025) in
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favour of Petitioner No. 2, authorising him to act on behalf of RespondentNo. 1 in respect of the owner’s allocation, including execution of deeds and
completion of necessary formalities.
8. Pursuant thereto, Petitioner No. 2 entered into multiple agreements for sale
concerning the said 9 units, and payments aggregating to Rs.
3,80,55,582/- were remitted to Respondent No. 1.
9. Subsequently, disputes arose between the parties in relation to, inter alia,
accounting of sale proceeds, alleged excess remittances, and issues
concerning registration of conveyances. Thereafter, by letter dated
18.06.2025, Respondent No. 1 purported to revoke the aforesaid registered
Power of Attorney.
10. The Petitioners, by letter dated 20.08.2025, raised their claims and called
upon the Respondents to resolve the disputes. However, in the absence of
any response, the Petitioners invoked the arbitration clause contained in
Section XVI(3) of the Development Agreement dated 06.01.2022 (registered
on 14.01.2022), by issuing a notice under Section 21 of the Arbitration
and Conciliation Act, 1996. The said notice was addressed to Respondent
No. 1, with a copy marked to Respondent No. 2.
11. Despite receipt of the said notice, the Respondents failed to respond or take
any steps towards resolution of the disputes.
12. In these circumstances, the Petitioners have approached this Hon’ble Court
under Section 11 of the Arbitration and Conciliation Act, 1996, seeking
appointment of a Sole Arbitrator to adjudicate the disputes between the
parties.
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Submissions on behalf of the Petitioners
13. Mr. Soumya Roy, learned counsel for the Petitioners submits that the
present petition under Section 11 of the Arbitration and Conciliation Act,
1996 is fully maintainable, as the Development Agreement dated
06.01.2022 (registered on 14.01.2022) contains a valid and binding
arbitration clause governing the disputes between the parties. It is
contended that disputes have arisen in relation to accounting of sale
proceeds, alleged excess remittances, and the unilateral revocation of the
registered General Power of Attorney, all of which squarely fall within the
scope of the arbitration clause. Despite issuance of a notice invoking
arbitration under Section 21 of the Act, the Respondents have failed to
respond or take steps for constitution of the Arbitral Tribunal, thereby
necessitating the present petition.
14. It is further submitted that Petitioner No. 1, being a Co-operative Society
registered under the West Bengal Co-operative Societies Act, 1961, is not
precluded from invoking arbitration in the facts of the present case. The
dispute does not pertain to the internal affairs or management of the
Society, but arises out of a commercial development agreement entered
into with third parties. In such circumstances, there is no statutory
embargo under the said Act against reference of disputes to arbitration. In
support, reliance is placed on Jaipur Zila Dugdh Utpadak Sahakari
Sangh Ltd. v. Ajay Sales & Supplies reported as 2021(17) SCC 248
and Judgment of Karnataka High Court in CMP 04/2025, titled as Sri
Ramakrishna House Building Co-operative Society v. M/s Skilltech
Engineers & Contractors Pvt. Ltd.
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15. Learned counsel further submits that the tripartite agreement dated
09.11.2022 executed between the Petitioners, Respondent No. 1, and
Respondent No. 2 is merely a continuation and extension of the original
Development Agreement. It is argued that Respondent No. 2, having
entered into the transaction as an investor and being directly involved in
the performance of the project, is bound by the terms of the principal
agreement, including the arbitration clause, as the agreements form part
of a composite transaction.
16. It is further contended that the disputes raised are ex facie arbitrable and
do not fall within any of the limited categories of non-arbitrable disputes
as settled by the Hon’ble Supreme Court in Vijay Drolia v. Durga
Trading Corporation reported as 2021 (2) SCC 1. The present disputes
are purely contractual in nature and do not involve any element that
would render them non-arbitrable. In view of the limited scope of
examination under Section 11 of the Act, this Hon’ble Court is only
required to prima facie ascertain the existence of a valid arbitration
agreement.
17. In these circumstances, it is submitted that the disputes between the
parties are live and arbitrable, and in view of the failure of the
Respondents to act upon the invocation notice, this Court ought to
exercise its jurisdiction under Section 11(6) of the Act and appoint a Sole
Arbitrator to adjudicate the disputes between the parties.
Submission on behalf of the Respondent No.1
18. Learned counsel for Respondent No. 1 submits that the present petition
under Section 11 of the Arbitration and Conciliation Act, 1996 is not
maintainable in view of the statutory bar contained under Sections 108
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and 109 of the West Bengal Co-operative Societies Act, 1961.It 2026:CHC-OS:139
is
contended that Section 108 of the said Act provides for reference of
disputes touching the constitution, management, or business of a co-
operative society to the Registrar, while Section 109 bars the jurisdiction of
civil courts and other fora in respect of such disputes. It is contended that
Petitioner No. 1 is admittedly a Co-operative Society, and the disputes, as
pleaded by the Petitioners themselves, arise in connection with
transactions involving a Co-operative Bank, namely the Dakshin Dinajpur
District Central Co-operative Bank. In such circumstances, the special
statutory mechanism provided under the said Act for adjudication of
disputes would prevail, thereby excluding recourse to arbitration under the
Arbitration and Conciliation Act, 1996.
19. Learned counsel further draws attention to the pleadings in the petition to
submit that it is the Petitioners’ own case that Respondent No. 1, in his
capacity as Director of the said Co-operative Bank, persuaded Petitioner
No. 2 to enter into dealings with the Bank and obtained signatures on
blank papers. It is thus contended that the substratum of the dispute is
intrinsically connected with the affairs and business of a Co-operative
Society/Co-operative Bank. Consequently, the dispute is essentially one
which falls within the scope of Sections 108 and 109 of the West Bengal
Co-operative Societies Act, 1961, and is required to be adjudicated by the
statutory forum prescribed therein, thereby rendering the present
proceedings under Section 11 not maintainable.
20. In support of the aforesaid contention, reliance is placed on the judgment
of the Hon’ble Supreme Court in Gujarat Urja Vikas Nigam Ltd. v. Essar
Power Ltd. reported as 2008 (4) SCC 755, wherein it has been held that
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where a special statute provides for an exclusive forum for adjudication 2026:CHC-OS:139
of
disputes, the jurisdiction under the Arbitration and Conciliation Act
stands excluded. It is thus submitted that the Petitioners cannot bypass
the statutory remedy under the Co-operative Societies Act by invoking
arbitration.
21. Without prejudice to the above, learned counsel fairly submits that the
existence of the Development Agreement dated 06.01.2022 and the
arbitration clause contained therein is not in dispute, and it is also not
disputed that certain differences have arisen between the parties. However,
in view of the statutory bar and the nature of disputes as disclosed in the
pleadings, the same are not arbitrable and the present petition deserves to
be dismissed.
Submission on behalf of the Respondent No. 2
22. Learned counsel for Respondent No. 2 submits that the present petition
under Section 11 of the Arbitration and Conciliation Act, 1996 is not
maintainable as against Respondent No. 2, inasmuch as Respondent No. 2
is not a party to the arbitration agreement contained in the Development
Agreement dated 06.01.2022. The invocation of arbitration is founded
solely on the said Development Agreement, to which Respondent No. 2 is
admittedly not a signatory. It is contended that the subsequent tripartite
agreement dated 09.11.2022 does not amount to a continuation or
incorporation of the terms of the original Development Agreement, nor
does it bind Respondent No. 2 to the arbitration clause contained therein.
In the absence of a clear and unequivocal arbitration agreement binding
Respondent No. 2, no reference to arbitration can be made against it.
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23. It is further submitted that Respondent No. 2 had merely expressed an
intention to invest in the project and had entered into the tripartite
arrangement on a limited understanding. However, upon finding that the
project was not financially viable, Respondent No. 2 independently exited
the arrangement at an early stage and has had no further role or
involvement in the project. The present disputes, as raised by the
Petitioners, pertain to alleged financial transactions, accounting issues,
and revocation of power of attorney between the Petitioners and
Respondent No. 1, with which Respondent No. 2 has no nexus whatsoever.
Accordingly, Respondent No. 2 cannot be compelled to participate in
arbitral proceedings concerning disputes to which it is neither a necessary
nor a proper party.
24. Learned counsel further submits that there has been no valid invocation of
arbitration as against Respondent No. 2 in terms of Section 21 of the Act.
The purported notice placed on record was issued to Respondent No. 1,
with only a copy marked to Respondent No. 2. Such marking of a copy
does not constitute a valid notice invoking arbitration against Respondent
No. 2. In the absence of a proper notice invoking arbitration, the
precondition for commencement of arbitral proceedings against
Respondent No. 2 has not been satisfied. In these circumstances, it is
submitted that the present petition, insofar as it seeks reference of
disputes to arbitration against Respondent No. 2, is liable to be dismissed.
Legal Analysis
25. This Court has heard the submissions advanced by learned counsel for the
parties and has perused the material placed on record.
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26. At the outset, the objection raised by Respondent No. 1 with respect 2026:CHC-OS:139
to
maintainability on the ground that the Petitioner is a Co-operative Society
registered under the West Bengal Co-operative Societies Act, 1961, is
considered. It is the contention of Respondent No. 1 that in view of
Sections 108 and 109 of the said Act, the present dispute is not arbitrable
as the same pertains to dealings involving a Co-operative Bank. However,
this contention does not merit acceptance. A perusal of the pleadings and
documents on record indicate that Respondent No. 1 has been arrayed in
the present proceedings in his individual capacity as the owner of the
subject property, who entered into the Development Agreement dated
06.01.2022 with the Petitioners. The mere allegation that Respondent No.
1 was, at some stage, associated with a Co-operative Bank or acted as its
Director does not alter the nature of the present dispute, which arises out
of a contractual arrangement concerning development of immovable
property.
27. In this context, the reliance placed by Respondent No. 1 on the provisions
of Sections 108 and 109 of the West Bengal Co-operative Societies Act,
1961 is misplaced, as the present dispute neither touches upon the
constitution, management, or business of a Co-operative Society nor
constitutes a dispute required to be adjudicated by the statutory forum
under the said Act. On the contrary, the dispute is purely contractual in
nature between the Petitioners and Respondent No. 1 in his personal
capacity. The Hon’ble Supreme Court in Jaipur Zila Dugdh Utpadak
Sahakari Sangh Ltd. (supra) support the proposition that disputes
arising out of commercial transactions between a co-operative society and
third parties are arbitrable. The ratio clearly recognizes that contractual
10
disputes with third parties remain arbitrable notwithstanding the status 2026:CHC-OS:139
of
one party as a co-operative society. Similarly, in Sri Ramakrishna House
Building Co-operative Society (supra), the Karnataka High Court in an
identical case has reiterated that disputes arising out of development or
construction agreements entered into by a co-operative society with
independent contractors or developers are purely commercial in nature
and do not attract the bar under the Co-operative Societies enactments.
The said judgment reinforces the principle that the determinative test is
the nature of the dispute and not merely the character of one of the
parties.
28. In the judgment relied upon by Respondent No. 1, namely Gujarat Urja
Vikas Nigam Ltd. (supra), the Hon’ble Supreme Court held that where a
special statute creates a specific adjudicatory mechanism and confers
exclusive jurisdiction upon a designated authority in respect of disputes
arising under that statute, the jurisdiction of arbitral tribunals stands
impliedly excluded. However, the ratio of the said judgment is applicable
only where (i) the dispute arises directly under the special statute, and (ii)
the statute evinces a clear intent to confer exclusive jurisdiction on a
statutory forum. In the present case, neither of the aforesaid conditions is
satisfied. The dispute does not arise under the West Bengal Co-operative
Societies Act, 1961, nor does it involve adjudication of rights or obligations
created by the said statute. Rather, the dispute emanates from a
Development Agreement executed between the Petitioners and Respondent
No. 1 in his individual capacity as the owner of the subject property.
Therefore, the statutory mechanism under Sections 108 and 109 of the
said Act is not attracted. Consequently, the ratio in Gujarat Urja Vikas
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Nigam Ltd. (supra) is clearly distinguishable and does not advance the
case of Respondent No. 1.
29. Insofar as Respondent No. 2 is concerned, this Court is unable to accept
the contention of the Petitioners that the arbitration clause in the
Development Agreement dated 06.01.2022 can be invoked against it. While
it is settled that, in appropriate cases, a non-signatory may be referred to
arbitration under the “group of companies” or composite transaction
doctrine, such reference is contingent upon a clear demonstration of a
mutual intention to bind the non-signatory to the arbitration agreement,
and the existence of a composite, interdependent transaction where
performance of the agreements is so intrinsically linked that they cannot
be segregated. In the present case, the subsequent tripartite agreement
dated 09.11.2022 does not, prima facie, incorporate or adopt the
arbitration clause contained in the Development Agreement, nor does it
indicate any intention on the part of Respondent No. 2 to be bound by the
said arbitration agreement. The said agreement appears to be an
independent commercial arrangement whereby Respondent No. 2
expressed willingness to invest in the project. Further, the material on
record indicates that Respondent No. 2 exited the arrangement at an early
stage upon finding the project to be financially unviable, and there is no
material to demonstrate its continued participation in the performance of
the Development Agreement.
30. Significantly, the disputes raised by the Petitioners pertain to accounting of
sale proceeds, alleged excess remittances, and consequences arising from
revocation of the Power of Attorney, issues which arise out of obligations
between the Petitioners and Respondent No. 1. These disputes are neither
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dependent upon nor inextricably connected with any obligation 2026:CHC-OS:139
of
Respondent No. 2. Thus, the requirement of a composite transaction,
where the agreements are so interlinked that they must be performed
together, is not satisfied. In the absence of (i) any express or implied
incorporation of the arbitration clause, (ii) any demonstrated mutual
intention to bind Respondent No. 2, and (iii) any inextricable linkage
between the agreements, this Court is of the considered view that
Respondent No. 2 cannot be compelled to arbitrate. The principles
governing reference of non-signatories, as recognized in Vijay Drolia
(supra), do not extend to the facts of the present case.
31. Insofar as Respondent No. 1 is concerned, there is no dispute regarding the
execution of the Development Agreement dated 06.01.2022 or the
existence of the arbitration clause contained therein. Disputes have
admittedly arisen between the Petitioners and Respondent No. 1. Applying
the principles laid down in Vijay Drolia (supra), this Court is required at
this stage to undertake only a prima facie examination as to the existence
of an arbitration agreement and the arbitrability of disputes. In the present
case, this Court is satisfied that there exists a valid arbitration agreement
between the Petitioners and Respondent No. 1, and that the disputes
raised are arbitrable in nature.
32. In view of the above, the objection raised by Respondent No. 1 is rejected.
The present petition is allowed insofar as it seeks reference of disputes
between the Petitioners and Respondent No. 1 to arbitration. However, the
petition is dismissed as against Respondent No. 2, as no arbitration
agreement exists between the Petitioners and Respondent No. 2, and no
valid notice under Section 21 of the Act has been issued to it.
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33. Accordingly, this Court is prima facie satisfied that an arbitrable dispute
exists between the Petitioners and Respondent No. 1, warranting
appointment of a Sole Arbitrator under Section 11 of the Arbitration and
Conciliation Act, 1996. Therefore, Justice Pranab Kumar Chattopadhyay, a
former Judge, of this Court is appointed as the Sole Arbitrator to
adjudicate the disputes between the Petitioners and Respondent No. 1,
subject to furnishing disclosure in terms of Section 12 of the Arbitration
and Conciliation Act, 1996.
34. The learned sole Arbitrator shall communicate his acceptance to the
Registrar, Original Side within a period of two weeks from the date of
communication of this order.
35. The learned Arbitrator shall be at liberty to fix his/her fees in accordance
with the Fourth Schedule of the Act or as may be agreed between the
parties.
36. All rights and contentions of the parties are kept open to be decided by the
learned Arbitrator.
37. The petition is accordingly allowed against Respondent No. 1 and dismissed
against Respondent No. 2.
(GAURANG KANTH, J.)
Sakil Amed P.A.
